2025 Financial Tips: 6 Steps to Set Yourself Up for Success

Save for retirement. Bolster your emergency fund. Better your credit. Pay down debt.

While there's no doubt that these financial goals are a pathway to a better future, they're merely a dream until you have a plan.

No matter your money goals for the new year, you'll need an intention and a road map. That's because when you break down a goal into smaller, actionable steps, you can see what tangible actions you'll need to do to reach that goal. Plus, it can provide greater focus and motivation. If you're feeling overwhelmed about reaching a money goal, don't be. Here are some easy, manageable steps to take to set yourself up for financial wellness.

Why Goal Setting Matters When Building Credit

When it comes to elevating your credit score, it's particularly important to set a goal. Why's that? To start, bettering your credit isn't an overnight process – gradually lifting your score requires effort, know-how, and patience.

Further, there's a lot to get your head around when it comes to credit. For starters, you'll need to understand the basics of credit, such as the different parts of a credit score and where your credit score starts.

Plus, the world of credit is ever-changing (yes, it can be pretty complicated). All this certainly is not a bad thing, but you'll want to stay clued in about it. For instance, some companies, such as Self, now offer free rent reporting* to the credit bureaus to help you build your credit.

You'll also want to look at the particulars of your credit history to see where you stand and what steps you can then take to elevate your score. You can order a free credit report weekly from AnnualCreditReport.com.

6 Steps to Set Yourself Up for Financial Success in 2025

Ready for a step-by-step approach to ensuring you enjoy financial success in the new year? We got you. Here's how to go about it:

1. Start with a Budget That Works for You

A budget can evoke feelings of deprivation, tediousness or feeling restricted. Here's the thing: a budget is more like a money management plan, a "money flow system," or the foundation to stay on top of your cash flow. That way, you can ultimately align your cash flow with your past (i.e., paying off debt), present (i.e., current living expenses), and future (i.e., financial goals), as part of your vision and values.

If you're new to budgeting, start by getting a big-picture idea of your current money situation. You can use a money management app, which links your financial accounts, such as your bank accounts and credit cards, to the app. From there, you can see where your money is going. You can also look at past bank and credit card statements. Many financial institutions and credit card issuers offer charts that help you visualize spending categories.

Once you have a general idea of where your money is going, commit to creating a budget. Popular budgeting methods include the zero-sum budget, 50/30/20 rule, or the guilt-free budget.

Making changes to your budget? If so, consider cutting non-essentials. Then, think of ways to bring in more money, perhaps through side hustles. Doing both can create room to pay down your debt or to put toward savings.

2. Build or Replenish an Emergency Fund

Another beast of a money goal is to have an emergency fund. Whether you're building or replenishing your rainy-day fund, it can feel like a Herculean task, especially when you have bills to pay and debt to crush–not to mention juggling your other financial goals.

Remember: it's about baby steps. It's totally doable to save small amounts regularly, even on a tight budget. You can start by saving $5 a week or $20 a month. If you save $5 a week, that's $260 a year. Stashing $10 a week? That's $520 a year.

Consider automating your savings to keep it as simple as possible. Look for accessible savings features and tools from banks. For instance, there are roundups, which round up each transaction to the nearest dollar and save the difference.

Another powerful savings tool is high-yield savings accounts. These are savings accounts with higher-than-average interest rates, which can help you earn a little extra on the interest just to park your money in a savings account.

3. Take Steps to Build Your Credit

In the new year, make it a priority to lift your credit. As mentioned, order a credit report or sign up for a credit monitoring service to get an idea of your credit history. Some credit card issuers offer you a credit score that's usually updated monthly, free of charge.

Look at areas that could use improvement. If you'd like to establish or elevate your score, see what areas could improve, and go from there. For example, if you were behind or missed payments in the past, focus on staying on top of your monthly payments by paying at least the minimum. You'll also want to keep your credit utilization low, don't apply for credit unless you absolutely need it, and monitor your score regularly.

Consider secured cards. Secured credit cards can also be a great way to improve your credit. Unlike unsecured credit cards, these cards require a security deposit. The security deposit usually matches your line of credit, so if your deposit is $250, so is your line of credit.
The deposit is refundable and serves as collateral in case you aren't able to make your payments.

Not only are secured cards a simple way to establish or elevate credit, but some cards give you the option to move to an unsecured card if you make a history of on-time payments.

Look into credit-builder loans. Credit-builder loans are loans where the lender puts you money in either a savings account or certificate of deposit (CD). You're financially on the hook for making a series of monthly payments (plus interest) for the life of the loan. Once you're done paying it off, you get the funds—minus any fees and interest.

With a Self Credit Builder Account, the money is held in a certificate of deposit (CD). When you make a monthly payment, it is reported to the three major credit bureaus–Experian®, Equifax®, and TransUnion®. This can help grow your credit history, which makes up 35% of your FICO credit score.

4. Reduce and Manage Debt Strategically

No matter how much debt you're shouldering or where you're at in the process, you'll want to consider the best tactic to crush it. Here are two options you might want to consider:

Avalanche payoff method. Tackling high-interest debt first can help you save the most money. To do so, consider the avalanche debt payoff strategy. That's when you line up your high-interest debt, such as credit cards, according to the interest rate, from highest to lowest.

Make the minimum monthly payments on all your card balances. Then, focus on making headway on the debt with the highest interest rate. Once that's cleared to zero, work on the card with the second-highest rate and work your way down.

Credit card debt consolidation is another potential tactic for developing a plan to pay off debt. When you consolidate your debt, you take out a new loan and lump your current high-interest debt into one.

Credit card debt consolidation can simplify your payments. It can also lower your interest, your monthly payments, or both. However, potential drawbacks include the fact that there might be upfront fees, and clearing your balance could lead to more debt down the line. In other words, when you transfer your existing card balances to the new loan, you might be tempted to rack up a balance on those old cards.

Note that to be eligible for the most favorable interest rates and terms, you usually need to have a high credit score.

5. Understand and Maximize Tax Benefits

Another way to spruce up your finances in the new year is to get your head around tax benefits. You can make the most of valuable tax benefits by boosting your tax know-how.

Take advantage of tax credits. If you're eligible for tax credits, that's money that gets subtracted from how much you owe Uncle Sam–or it can boost your tax refund. A valuable tax credit is the Earned Income Tax Credit (EITC), which is for folks whose income is low- to moderate. The amount of your credit may change if you have children, dependents, are disabled or meet other criteria.

Contribute to tax-advantaged accounts. Another way to maximize tax benefits is to contribute to tax-advantaged accounts–if you can swing it. These accounts include HSAs, Roth IRAs, and 529 college savings plans and offer valuable tax benefits.

Tax-advantaged accounts have annual maximum contribution limits, and you must be eligible for them. So, you'll want to pore over eligibility requirements and contribution caps.

Sync your tax refunds with your financial goals. If you're expecting a tax refund, plan on how you're going to use them to best support your financial goals. The IRS makes it easy for you to split your refund so it gets directly deposited into up to three separate accounts. Whether you want to use it for debt payment, an emergency plan, a college fund, or a little bit of each, plan accordingly.

6. Plan for Long-Term Goals

Want to buy a house? Get married? Or maybe set your kids up with a college fund once they graduate high school? You can make those seemingly far-off goals a reality by setting realistic goals.

From there, you can set realistic savings goals. Look at your current expenses and debt obligations. Then, assign a target date and target amount. If necessary, make changes to your budget so you free up some funds to make greater headway.

Staying Consistent with Your Financial Goals

Having a plan for your long-term goals is one thing, but staying consistent with them is another. Consider using simple, low-cost tools to monitor your financial health to make steady headway.

For instance, look for free credit monitoring tools and free or low-cost budgeting apps. These can help you monitor your progress in lifting your credit and keep track of your cash flow. From there, you can have a bird's-eye view of your finances.

Set regular check-ins to review your budget, savings, and credit progress. This is a good opportunity to assess your situation, determine what's working and what's not, and make adjustments as necessary.

Remember that growth is not a linear process, no matter what your financial goals are in the new year. There will be times when you feel like you're making great progress. Then, other times, life throws you a curveball, and you need to hit "pause" momentarily.

If you're feeling financially stressed, give yourself a break and do some self-care. The important thing is to stay focused, slowly develop positive money habits, and keep going.

Frequently Asked Questions (FAQs)

How can I start building credit if I have none?
You establish credit by opening a secured credit card or by opening a credit builder loan. Over time, you can lift your credit score. Once you've built some credit, continue to lift your score, by making on-time payments, keeping your credit usage low, and not applying for credit unless you absolutely need it.

How much should I save in an emergency fund?
The recommended month is three to six months of living expenses but could be more or less depending on your situation. Start by saving a smaller amount, and go from there.

What's the best way to monitor my credit?
You can monitor your credit by signing up for a free credit monitoring service. These services usually provide you with regular updates to your credit reports and scores.

*Results vary. You may not receive an improved credit score. Not all lenders use scores impacted by rent/utility payments.

About the author

A personal finance writer for over 8 years, Jackie Lam covers money management, lending, insurance, investing, and banking, and personal stories. An AFC® accredited financial coach, she is passionate about helping freelance creatives design money systems on irregular income, gain greater awareness of their money narratives, and overcome mental and emotional blocks.

Her work has appeared in publications such as Bankrate, Time's NextAdvisor, CNET, Forbes, Salon.com, and BuzzFeed. She is the 2022 recipient of Money Management International's Financial Literacy and Education in Communities (FLEC) Award, and a two-time Plutus Awards nominee for Best Freelancer in Personal Finance Media. She lives in Los Angeles where she spends her free time swimming, drumming, and daydreaming about stickers.

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